The red state ripoff

Over at the Fourth Branch, they've got a nice map showing the states that receive more than a dollar back for every dollar they pay in taxes (which they've coded red), and the states that receive less than a dollar back for every dollar they pay in taxes (which they've coded blue). Just to repeat: Red states are getting a good deal, and blue states a bad one. Here's the map:

Remind you of anything?

Fourth Branch comments:

There is a very strong correlation, then, between a state voting for Republicans and receiving more in federal spending than its residents pay to the federal government in taxes (the rust belt and Texas being notable exceptions). In essence, those in blue states are subsidizing those in red states. Both red and blue states appear to be acting politically in opposition to their economic interests. Blue states are voting for candidates who are likely to continue the policies of red state subsidization while red states are voting for candidates who profess a desire to reduce federal spending (and presumably red state subsidization).

So is Ezra's implied argument that federal spending provides little or no benifit beyond the immediate area in which it is spent?

Blue state liberals may not appreciate the Norfolk Navy base, Fort Bragg, or the Centers for Disaese Control but their benifits extend far beyond the red states in which they are located.

Also, retirees who move from blue to red states would show up as a "subsidy" in this formulation, but many feel the payments they have made to SS and Medicare during their working careers allow them to consider these earned benifits rather than unearned subsidies.

A more meaningful map would show the distribution of payments for AFDC, Medicaid and other unearned entitlements compared to income tax collections and even that would miss the previous taxes payed by retirees who move from blue to red.

cbaaratta - We would be just fine without your help. Currently Virgina gets .92 cents for every $1.00 we pay into the Federal Highway Trustfund while New York gets $1.147. We are building our own roads and subsidizing your subways as well.

Republicans would likely argue that dollar amounts don't measure benefit, because the states aren't free to spend it as they see fit. It comes down to the philosophical differences between the parties.

Looking at it by state certainly makes it seem very IRONIC, but it would make more sense to examine the effects by voting district. I would guess that rural vs. urban is more highly correlated with subsidization (and political views), than what red/blue state.

Um... While the graphic is interesting, it's apparently based on information from the Tax Foundation and not directly on data from sources like the U.S. Census Bureau or the Department of Treasury. When presented in tabular form, with the dollars in-and-out alongside the population of each state, the picture looks a bit different.

Having said that, I'm 100% in favor of capitation tax levied against each state in proportion to its population. Let each state then decide which of its citizens to tax and which to subsidize... far simpler than income tax and it's the original constitutional solution to the "problem" purported to be depicted by the graphs.

Rieux makes a good point about programs with national impact being in the red states (the CDC was, I think, a particularly good point). Still, those programs employ thousands of people in those red states and produce economic activity that employ thousands more. The government is creating a benefit for the people in those states while many of those people decry the intrusion of the government.

lkslongboarder is right. This is a rural/urban issue. The states with the biggest cities are the ones that contribute more in taxes, because cities are the economic engines of the country (read Jane Jacobs). Thats why Texas is one of the few conservative states that pays more in taxes, because they have Houston, Dallas, Austin and San Antonio.

I live in the rural west and I think this is one of the most important things that the average person has no understanding of. Without the federal government, where I live would be inhabited by poor cattle ranchers, oil and gas roughnecks, and little else. Most of the decent middle class jobs are with the BLM, Forest Service, or other state or local governments (many of which are subsidized by the feds). Federal spending makes an enormous contribution to more stable local economies in rural areas.

But all of the conservatives here have this attitude that the feds are screwing us over! It drives me crazy, can you tell?

"while red states are voting for candidates who profess a desire to reduce federal spending"

Only this isn't actually true in practice.

When elected, Republicans institute policies that direct more spending towards red states (ag subsidies, medicare private fee-for-service plans, military spending, etc), and that direct what people think are less money toward blue states (cuts to social security, cuts to education, cuts to safety net hospitals, etc)--but the true distribution here isn't really clear to me. From Reagan on, they have EXPANDED government spending to an incredible degree, almost all deficit-financed.

Democrats, on the other hand, tend to send money to different people, mostly low-income and middle income ones, regardless of state. They do a lot more infrastructure building, and more cash on non-medical scientific research. And their cash goes to different institutions--less to military spending, and more to social insurance functions.

But the biggest difference between the parties isn't on the spending side, it's on the REVENUE side. Republicans deficit spend. Period. They increase spending, but more importantly, they cut revenues so that rich people pay less in taxes and have more money. The Democrats, on the other hand, pay for spending--AND they pay off the debts that Republicans incurred as they ran up the credit card. Dems increase taxes on the wealthy more than on the middle class and lower income to do this.

Another big difference is revenue neutral for the government, but has a major impact on how much money citizens have. Dems also support enforcement of regulations, like wage laws and contracts, that put more money in middle class people's pockets and less in the pockets of employers and wall street bankers. This doesn't cost the government any appreciable sums of money, but it has a MAJOR impact on low-income wages; no idea how that breaks out state-by-state.

Assuming that blue-staters act 'politically against their economic interests' accepts the conservative short-term view that one's 'economic interests' are limited to keeping tax monies in one's own pocket. I prefer the liberal view that my economic interests benefit from contributing to the common good. A rising tide lifts all boats - my country as a whole becomes better.

So is Ezra's implied argument that federal spending provides little or no benifit beyond the immediate area in which it is spent?

Blue state liberals may not appreciate the Norfolk Navy base, Fort Bragg, or the Centers for Disaese Control but their benifits extend far beyond the red states in which they are located.

Also, retirees who move from blue to red states would show up as a "subsidy" in this formulation, but many feel the payments they have made to SS and Medicare during their working careers allow them to consider these earned benifits rather than unearned subsidies.

A more meaningful map would show the distribution of payments for AFDC, Medicaid and other unearned entitlements compared to income tax collections and even that would miss the previous taxes payed by retirees who move from blue to red.

Posted by: WoodbridgeVa1

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Mr. Klein made no such implication. That's yours. The financial benefits associated with the bases or other Federal government facilities go to the state where they operate. Which is why States fight tooth and nail to keep the bases they have.

Take Virginia, which like Maryland, has an well above average amount of Federal government. Take out the Federal Government and military in Virginia and all the support contractors and what do you have left. Williamsburg, Kings Dominion and tobacco. Virginia would be another pathetic Alabama.

@Woodbridge- Interesting take on the disparities. I think it's important to take into account a wide range of factors in determining the "fairness" of the allocation of tax dollars, so thinking about just transportation may not be fair.

It seems to me a big factor in the difference between New York and Virginia's rates has to do with the ratio of the population/car drivers. Since New York relies more on public transportation, there are less individuals driving cars, and therefore a smaller per capita use of gasoline (see here: http://www.statemaster.com/graph/ene_gas_con_percap-energy-gasoline-consumption-per-capita).

That would naturally produce less tax revenue, per person, than a state that relies more on driving and gasoline.

I'm also not convinced that the taxes Virginians pay on gas helps the MTA in New York. I took a quick glance at the MTA budget, and I didn't see any federal taxes as part of the financing. See the budget here: http://mta.info/mta/budget/feb2010/0210_full.pdf.

Ultimately though, I do agree with you that New Yorkers should bear the burden of our roads systems- by using congestion pricing and perhaps a higher gasoline tax, we should be able to accomplish that.

And for the record, Virginia isn't the "deep south." I was thinking more along the lines of Mississippi, Alabama, etc. And even though they seem to pay for their roads, they certainly don't fit the whole bill for the services their state governments provide.

BTW. I don't believe any of this includes SS payouts. SS payments don't go to the states, they go to individuals. None of the other data I've seen similar to this ever has included SS payments, and this is pretty much consistent with those other sources.

If only the South had won the Civil War, the North would have one more source for cheap raw agricultural products, be able to keep the fruits of our labor, *and* we wouldn't have to deal with the economic fall-out from a succession of economically disastrous red-state presidents.

Another interesting comparison would be to look at the makeup of state legislatures, not just presidential voting. I'd think that conservative state legislatures are stingier by many measures, so the influx of federal dollars is partly making up for the lack of services provided by the state. It's easy to think of this as wrong or unfair, but in terms of bypassing political blockades and getting money to the citizens who need it, using federal money to balance stingy state spending is a clever and possibly legitimate solution.

One of the reasons why some red Western states get more back is, though they're ginormous, much of their land is federally-owned (state parks, wilderness, etc.) and thereby isn't bringing in any property tax or sales tax, or timber revenue, or whatever else. At least that's something people in Idaho say a lot.

MosBen:
Rieux makes a good point about programs with national impact being in the red states....

In the immortal words of Joe Wilson: You lie!

My point was just a triviality about map coloring and the space between "$1.01 or more" and "Below $1.00." The comment regarding the CDC and other red-state funding recipients that benefit blue staters as well came from WoodbridgeVa1.

("You mis-cite" is probably more apropos here and less inflammatory than "You lie!", but Wilson's version is so good'n'punchy.)

Of course, many, if not a majority, of the tax payers within blue states paying high income tax rates do not vote for the Democratic Party. Many of the blue states have large urban population centers with poor, uneducated voters - - the Democratic Party's core constituency - - thus making them blue states.

If this chart was done by zip code rather than state, the trend shown would be different in many circumstances. Likely much more diversity within the blue states with many zip codes voting R being net contributors of tax dollars rather than beneficiaries.

The real GOP feat of the last ~40 years has been getting poor, uneducated people to vote against their own economic self interest by exploiting social issues. By sheer numbers, if they only actually expected rich people to vote for them, they'd never win a single election.

jesse - - educational demographic that votes most predominantly by % for D's are those that are not high school graduates. If you would subdivide college graduates between those with and without PhD's, perhaps PhD's would be a higher percentage voter of D's than non-high school grads. Non-PhD College Grads tend to be highest % GOP voters.

Look at any exit polling data from presidential elections. how do you think penn, california, ny, nj are consistently carried by d's? It is the huge margins in urban areas, for which I hypothesize that the thesis Ezra puts forth by this map is largely inaccurate. See my zip code point above.

Amen to millionea7. The socialist's eternal concern is with other people's money. They want to move it one way, and then they're shocked at the resulting inequality of their own machinations, never fathoming, somehow, that politicians are snake oil salesmen and that's all there 'tis when you agree to play with them.

Here's a question for Klein's inner moron: If there is to be some sort of perfect "fairness" to taxes sucked/taxes bequeathed, then why not NOT steal the money in the first place? Would it then not be profitable for dumps like the Washington Post to employ chumps like Klein, who makes his living playing red states against blue?

Another aspect this reflects is the inherent unfairness of "progressive" rates of taxation. If you are in NYC making 75k, you are taxed at the same rate as someone in Kansas making 75k, despite the fact that your cost of living is vastly higher...you are probably living in a shoebox while the Kansan has an acre.

To quote the author of the dollar-for-dollar comparison, former Tax Foundation economist Curtis Dubay:

"The Tax Foundation’s annual federal tax burden and expenditure study clarifies the geographical patterns of income redistribution that federal tax and spending policies cause each year. The results of the study have been controversial for years because they show that the nation is not only redistributing income from the prosperous to the poor, but from the middle-income residents of high-cost states to the middle-income residents of low-cost states.

"Thanks to a steeply progressive federal income tax, states with higher incomes pay vastly higher federal taxes, payments that are unlikely ever to be matched by federal spending directed to those states. Ironically, most of these high-paying states are the so-called blue states that have generally elected politicians who support a more steeply progressive tax system even though their own constituents bear a greater share of the burden as the code gets more progressive."

Uh, there is hardly any correlation to the 2008 election result map. I mean there are only 15 states on there that are blue... That means 70% of all states are red, which isn't even close to being true in the election result map.

North Dakota has a split personality. The votes for Governor and President generally go Republican while the Democrats have had a lock on the Senate and House for the past 30 years. And since the Senate and House determine how much money we get back from the Federal Government, it is because of the Democrats.

So the correlation between how much a State gets back and who it votes for as President is only a coincidence.

This is a stupid study. It doesn't even come close to showing what the author of this post claims it shows. The top 1% of the countries income earners pay 40% of the taxes in this country. Many of these earners live in the nation's population centers (which also happen to be "blue states" for a variety of other reasons). By definition, these people will never have voting power anywhere. To say that blue state democrats are voting to send their tax dollars to red states is asinine. It is not the average democrat that is paying the vast amounts of income tax revenue that gets sent to less populated states. It is the super wealthy that live in places surrounded by democratic voters. Many, many of those paying loads of money to the federal government are Republicans.

This is a red herring. In every state, there are people who pay alot in taxes who do not get from the government what they pay in, and there are people who pay little to no taxes and they receive much more from the government than they pay in. I paid over $50,000 in federal taxes this year, and I know that that money went to support people and programs in every state, red and blue.